Critically Evaluating Ethics and Social Responsibility in Business

This essay critically evaluates the business case for using ethics and social responsibility to guide business decisions, drawing upon peer-reviewed scholarly literature, particularly the study by Ameer and Othman (2012) on sustainability practices and corporate financial performance. The analysis encompasses both quantitative and qualitative research methods used to assess the financial performance of companies with strong sustainability practices compared to those without. It discusses the importance of sustainability in strategic planning, focusing on ethical practices, employee well-being, environmental stewardship, and customer relations. The essay also addresses counter-arguments suggesting potential difficulties and costs associated with maintaining sustainable approaches, while ultimately concluding that companies prioritizing ethical and socially responsible practices are more likely to achieve higher financial performance and competitive advantage in the global market. Desklib offers a wealth of resources, including past papers and solved assignments, to further support students in their academic endeavors.

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Introduction
Ethics and corporate social responsibilities are the integral parts of the business, which
contribute to the business success. According to Tenuta (2010), corporate social responsibility
has the clear impact on the activities and decisions for developing the sustainable position. It is
to be indicated that the ethical field is often involved with the systematic, recommended
concepts, and defending method of right and wrong behaviour. The article, Sustainability
Practices and Corporate Financial Performance: A Study Based on the Top Global
Corporations provides the broader perspectives based on sustainability and ethical business
practices. The thesis developed in this study determines that the companies that are maintaining
the sustainable and ethical practices have higher financial performance than the companies,
which are not maintaining the sustainable practices (Ameer & Othman, 2012). The essay would
describe the formulation of the sustainable practices to increase the financial performance of the
firm. The study has used the quantitative and qualitative method to collect the necessary
information from 100 sustainable global companies. The further study would review the methods
used in this article and would identify the use of the ethical and sustainable business practices.
Discussion
The sustainability practice can lead an organisation towards success. According to
Wagner (2011), sustainability is concerned with the organisational functionalities that create the
significant impacts on the societies, ecosystems, and the future environments. Each of the
business organisations develops a clear and concise focus towards a particular vision to improve
their position in a competitive scenario. While operating in an environment, it is essential for an
organisation to understand the environmental and societal need. The corporate companies need

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to keep the focus on the structured strategic planning that can develop a sustainable position for a
longer time (Patten, 2012). This long-term focus demands for more inclusive set of
responsibilities that would drive the organisation in achieving the competitive position. The
study is widely focusing on the centralized thesis statement, which depicts that the companies
maintaining the sustainable practices are more likely to achieve higher level of financial profit in
compare with the companies that do not maintain such practices (Ameer and Othman, 2012). The
study is developed by using both the quantitative and qualitative data collection process. The
target population for the study is 100 sustainable global companies in the year of 2008. This
population was chosen among 3000 firms from the developed countries and the emerging
markets.
The study introduces the significance of the sustainable approach of the firm that helps in
strengthening the competitive position. The publication of the Brudtland Report represents an
observable outcome. It depicts that the development of the sustainable approach helps in meeting
the needs of the current environment without compromising the future abilities of fulfilling the
needs. Gray (2010) defined sustainability at the broadest level by stating that it is a system
approach, which holds the higher level of difficulties in conceptualizing more clearly. The
counter argument present on such basis acknowledges the diverse nature of the sustainable
development. The assumptions are made upon the difficulty level of maintaining the sustainable
approaches are strictly argued. However, the study develops the understanding regarding the
impact of the environmental protection activities that can ensure the long term sustainability of
the firm. Henri and Journeault (2010) opined that there is no specific mechanical law that links
the environmental performance with the performance in the economic field. The corporate
business marketers need to identify the set of responsibilities and restrictions. Along with all

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these restrictions, it is even essential for these business marketers to understand the threats,
incentives, and opportunities. Such rethinking process would result in a new and innovative
environmental profile.
Corporate social responsibilities are adopted by the firms to maintain the right social
actions and benefit the social structure. It suggests the long term sustainability of the firm in a
competitive market. The article depicts that the government has imposed the regulations to
promote the rightful actions for the societal benefits. Moreover, these regulations are imposed to
eliminate the negative externalities and diminishing the unethical practices that affect the society.
However, Saeidi et al., (2015) argued that the development of the industrialization affects the
environment mostly. It is assumed the continuous innovations in the industrial businesses are
emitting the waste that affects the environment, which is against the environmental rules. The
statement is thus quite contradictory in such context. It is even stated that the higher impact on
the environment can lead a firm towards competitive disadvantage. The firm can be burdened
with higher environmental costs relative to other industries.
The hypothetical analysis of the study examines the keen connection between the
corporate performance and sustainability. The multidimensional construct based study focuses
on the environmental, economic, and social indicators. The sample of 55 firms from the Dow
Jones Sustainability Index for the time within 1998-2004 was selected for this quantitative and
qualitative study. After rescreening 100 sustainable as well as the non-sustainable firms, the
study conducted the research to understand whether the firms are able to achieve the competitive
advantage by maintaining the sustainable approach or not. The research study develops a set of
hypotheses that defines the context, the first hypothesis highlights the revenue growth is higher
in the companies that maintain the sustainable responsibilities during the period of 2006-2010.

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The second hypothesis suggests that the Return on Assets (ROA) is higher in the companies that
maintain the sustainable approach than the companies that control these practices. The third
hypothesis defines that the profit before tax (PBT) is higher in the globally sustainable company
than the control companies during the period of 2006-2010 (Ameer and Othman, 2012). The
fourth hypothesis formulated in this research study indicates the cash flows derived from the
operational activities are also higher in the sustainable companies than the control companies
during the same period. The conducted study therefore clearly defines that the companies need to
undertake the sustainable approach and maintain the ethical business practices to ensure the
growth in the financial aspects.
The quantitative and qualitative methods used in conducting this research among four
major segments, such as community, diversity, ethical standards, and environment. The
findings obtained from the study indicate that these four segments are the major components for
identifying commitments of the company to develop the sustainable approach in their operating
locations. The country based clusters are identified in defining each of these segments. After
recognizing the result, it has been observed that the definition of the sustainability is presented
differently by judging the diverse perceive values. Wagner (2011) stated that the environmental
sustainability can cause the worse scenario for a firm since it involves the higher capital
investment. On the other hand, Eccles, Ioannou and Serafeim (2014) argued that social
responsibilities are responsible for the growth identified in the financial aspects. However,
opposing such statement, Henri and Journeault (2010) exclaimed that social responsibilities may
constrain the maximization of firm’s value and leading towards the worse financial conditions.
The control companies prepare the entire structure with appropriate investment on the different
segments that could decrease the cost of the social responsibilities and could be invested in other

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business segments. However, the statistical analysis clearly develops the hypotheses that are
indicating the firms, which maintain the sustainable approaches are more financially benefitted
than the firms that are not maintaining these approaches.
It can thus be inferred that the companies maintaining the sustainable practices are more
likely to achieve higher level of financial profit in compare with the companies that do not
maintain such practices. The firms need to be much attentive towards the sustainable
development while structuring the business functionalities for achieving the competitive
advantage (Saeidi et al., 2015). It is notable that the government has imposed the regulations to
promote the rightful actions for the societal benefits. Moreover, these regulations are imposed to
eliminate the negative externalities. In order to prevent the external threats, the companies
require maintaining these regulations to develop the sustainable position in the competitive
market (Henri and Journeault, 2010). Therefore, it can be indicated that these four segments are
the major components for identifying commitments of the company to develop the sustainable
approach in their operating locations.
Conclusion
The study defines the significance of maintaining the sustainable and ethical approaches
for achieving competitive advantage and strengthening the position in the competitive market.
The quantitative and qualitative research methods are used in this study to ensure which of the
firms are more financially benefitted by developing these practices. The survey result indicates
that the companies maintaining the sustainable practices are more likely to achieve higher level
of financial profit in compare with the companies that do not maintain such practices. However,
it is also noticed that the assumptions are made upon the difficulty level of maintaining the

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sustainable approaches are strictly argued. Despite the arguments presented against the definition
of the sustainable approach, it has been observed that the establishment of the secured
sustainability parameter helps the firm to ensure growth in the financial condition in this global
competitive market.

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References
Ameer, R., & Othman, R. (2012). Sustainability Practices and Corporate Financial Performance:
A Study Based on the Top Global Corporations. Journal of Business Ethics, 108(1), 61-
79.
Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on
organizational processes and performance. Management Science, 60(11), 2835-2857.
Gray, R. (2010). Is accounting for sustainability actually accounting for sustainability and how
would we know? An exploration of narratives of organizations and the planet.
Accounting, Organizations and Society, 35, 47–62.
Henri, J.-F., & Journeault, M. (2010). Eco-control: The influence of management control
systems on environmental and economic performance. Accounting Organization and
Society, 35(1), 63–80.
Patten, M. (2012). The relation between environmental performance and environmental
disclosure. Accounting, Organizations and Society, 27(8), 763–773.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate
social responsibility contribute to firm financial performance? The mediating role of
competitive advantage, reputation, and customer satisfaction. Journal of Business
Research, 68(2), 341-350.
Tenuta, P. (2010). The measurement of sustainability. Review ofBusiness Research, 10(2), 163–
171.

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Wagner, M. (2011). Corporate performance implications of extended stakeholder management:
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950.